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Raising all boats in Bennington

Raising all boats in Bennington

James Brown and The Bank of Bennington focus on growing a vibrant community

by Olga Peters, Vermont Business Magazine

Local. One of Vermont’s popular buzzwords. But for The Bank of Bennington’s President and CEO James Brown, local is how the bank does business.

The philosophy remains simple: local customers deposit local money, that stays in the local economy, which supports the local community. If done well, then everyone’s boat rises.

“We can’t do better than the economy we sit in,” Brown said. “So we need Bennington County, and Rutland County, to do better in order for us to do better.”

Brown, 50, joined The Bank of Bennington in 2001 as a senior credit officer. In 2008, he became president and CEO.

Local drew Brown to The Bank of Bennington 18 years ago.

A resident of New York State, Brown had served at multiple banks that were bought and sold and merged.

Brown completed his undergraduate studies at St Lawrence University. He holds an MBA from University at Albany, SUNY.

After college, Brown took an entry level job as a teller at a bank in his hometown. He worked his way up to a loan review position focused on commercial lending. According to Brown, that bank was sold and his job moved. He didn’t want to move so went to work for another large bank.

That large bank merged with another large bank and his job went to NYC.

“I knew that wasn’t what I wanted to do and I also knew I never wanted to work for a large bank ever again,” he said. “It’s just a different experience.”

“I needed a little more stability,” Brown said.

So after one more stop at a bank that got sold, Brown had the opportunity to take a position at The Bank of Bennington “and it’s "mutual" status sold it for me,” he said.

The Bank of Bennington is a mutual bank. “Shareholders” does not exist in its vocabulary. Instead, depositors own the bank.

According to the Federal Deposit Insurance Corporation (FDIC), mutual savings banks opened their doors in the United States as early as 1816. Most 19th century commercial bankers, writes the FDIC, served retail and commercial businesses. Mutual banks, however, focused on the working classes and created a bank where small-scale depositors could keep their money and earn interest.

The Bank of Bennington is the only bank with headquarters in the town. The bank also operates branches in Arlington, Manchester, and a satellite in Bennington. Recently, the company expanded beyond its home turf of Bennington County and into the city of Rutland.

Brown views those business expansions as a positive sign that the bank connects well with the community and its customers.

“One of the key points about our expanding in Rutland is that we’ve been so successful in Bennington,” Brown said. “And looking down the road five, 10 years, there’s a limit to how much we can grow.”

“We’ve gone from $120 million in deposits 11 years ago to $280 million, almost all of it in Bennington County,” he explained.

According to the FDIC, the Bank of Bennington has more than $400 million in assets. Bauer Financial has given the bank its highest rating — five stars — for the past 25 years. Bauer Financial analyzes the financial health of banks and credit unions.

The bank budgets more than $100,000 for annual donations. In 2018, employees volunteered a total of 3,130 hours.

James Brown, President and CEO of The Bank of Bennington interacts with a teller.

Brown loves the bank’s family atmosphere. He loves the small-town community atmosphere. Most of all, he loves the fact that it was a mutual and that, “We kind of control our own destiny.”

“We can’t be bought,” Brown said. “And even for the management team, we can look five years down the road, 10 years down the road. Not just one quarter.”

According to Brown, the previous senior management team was phenomenal. They made the bank a friendly place to work.

“I’d like to think we continue to do that even as we've grown,” he said.

Brown resists talking about himself. Almost every question, he turns to fit the bank.

“So I’ll give you something about me, but the bank is not me, it’s everybody who works here that drives the bank,” he said.

The economy they’re swimming in

According to the most recent numbers from the US Census Bureau, 36,054 people live in Bennington County. The county’s median age is 46.6 which is 10 percent higher than Vermont’s median age.

The county’s wages, too, dip below the state’s. According to the US Census, the county’s median household income of $52,251 (2017) is less than Vermont’s median of $57,808 (most counties are below the state average as Chittenden at $66,906 is the highest and most populous).

Approximately 12.8 percent of the county’s residents live below the poverty line.

Compare Bennington County to its southern sister Windham County ($50,831), and Bennington’s numbers appear better. Still, both counties face economic challenges and in most cases, lag behind the Chittenden-Montpelier corridor.

To combat these challenges, the Legislature created a special economic zone in 2015 called the Southern Vermont Economic Development Zone. Initiatives within the zone include developing an economic strategy, create a marketing and recruitment plan, and develop a regional CEDS. Later this year, a bi-county effort will produce the state’s first regional Comprehensive Economic Development Strategy (CEDS) plan.

This plan will help identify economic opportunities and prioritize economic development projects in Bennington and Windham Counties. The completed plan will then go to the federal Economic Development Administration (EDA) for approval.

Tom Dee, SVMC; Meg Campbell and James Brown, The Bank of Bennington, Citizens for a Greater Bennington.

Bottom line, this process will give economic development projects highlighted in the CEDS a leg up when applying for grants or other funding.

“I think, either population decline or getting people to move here seems to be the current challenge and some of that has to do with opportunities,” Brown said. “Housing stock is one of those [opportunities].”

According to a study Brown has seen, more people want to live downtown in walkable communities.

This is where the Putnam Block project comes into the picture.

Two years ago, the bank announced that it would join a group of investors to revitalize an anchor building called the Putnam Hotel and surrounding buildings in Bennington’s downtown. The plan also includes constructing a new grocery and medical building.

Hotel Putnam, Bennington. VBM file photo.

The redevelopment will include a mix of low, moderate, and market rate income apartments. Retail and dining storefronts are on the list. The local educational and medical institutions will also be in the new space.

The investment group includes:

The Bank of Bennington

Southwestern Vermont Health Care

Bennington College

Southern Vermont College

Dimitri Garder/Global Z International

Brian and Jennifer McKenna

Anthony and Jacqueline Marro

4 Putt Properties, LLC

Brown noted that finding employees can also prove difficult in the area and for the bank. Brown didn’t want to comment on the workforce challenges other businesses might face. He did say, “We find it challenging to find new employees.”

That said, most people at the bank stay for the long haul which is a good challenge to have. It’s not unusual to hear employees say they have worked at the bank 10 years.

Sometimes it’s just finding the “right fit,” Brown continued. Sometimes new hires turn down a job offer because their spouse can’t find local employment too.

For entry level positions, the bank has training. The bank also offers an education reimbursement program

“I think it’s good for people to grow themselves,” Brown said.

Some folks have masters and are still at the bank, this creates a “great for depth of pool,” he added.

But the longevity challenge also means not as many advancement opportunities, he said.

Most southern Vermont residents know the jokes poking fun at a perceived disconnect between the lawmakers in Montpelier and the southern region.

Phrases such as The Forgotten Kingdom, Vermont-a-chusetts, or simply south of Route 4 often describe the Bennington and Windham Counties’ place in the mind of Vermont.

Geographically Bennington has the added challenge that it lacks an interstate that connects the county to the rest of Vermont or bigger metro areas.

“But anything outside Chittenden County is different,” Brown said. “And I don’t care if you’re in Newport, or Brattleboro, or here — it’s not the same as in Chittenden County and I think that gets lost to anyone who’s in that economic environment.”

Southern Vermont is rural and the area deals with all the challenges facing rural communities across the United States, he said.

Bennington County has a tremendous framework of assets to work with and attract new people, he said.

“We have a lot of arts in the community, and a lot of great people, and great outdoor opportunities,” he said. “It certainly is a beautiful place to live.”

“But it’s not for everybody, so we have to find those folks that maybe this [area] is for and who want this setting,” Brown added.

He predicts that more businesses with products or services that allow them to locate anywhere will find Bennington attractive.

Brown points to Global Z, one of the partners in the Putnam Block Project. The international tech company can be anywhere, Brown said. Yet, the CEO, Dimitri Garder, has told Brown that Global Z wants to operate in Vermont.

Global Z specializes in working with companies to improve their customer-related data.

If the area can foster a collection of like-minded national or international businesses like Global Z, it will have “a multiplier effect,” Brown said.

Brown views part of the bank’s job as supporting anything that will add to such a multiplier effect. That support might be financial, he said, but the bank can also act as a local ambassador or community promoter.

“We exist for the benefit of the community,” he said. “We exist for our customers but if our community does well then our customers will do well and then the bank does well.”

Brown acknowledges that, unfortunately, Bennington can have a bad reputation, specifically when discussing the opioid crisis or economic challenges.

“Everything else can feel like a spiraling down,” he said. “It needs to be a spiraling up.”

“Momentum creates momentum,” Brown continued. “If we can do some good things – I think the downtown project is a good thing and I think it’s spawned some investments there – then hopefully those will all make it more attractive to live here and we can reverse the population decline and make it a better opportunity for everybody.”

Brown feels the old trope of “Vermont just hates business,” is overblown. But, he added, some of that reputation is earned.

“The great thing is you can connect with your customers,” he said. “I love the dialogue we can have with our legislators. I think that’s very unique.”

“I think Vermont gets a bad rap in terms of the difficulty doing business here,” Brown continued. “That being said, I think we can be more friendly to some of the processes for a business to open.”

According to Brown, he’s witnessed business owners become nervous about the state’s permitting processes across the board. Vermont’s permitting process can feel long and have uncertain timelines, he said. This uncertainty makes some business owners nervous because they never know if their budget or schedule will take a hit.

“They might look at the process and say, ‘I’m not even going to try,'” Brown said.

Even if someone went through the permitting process, whether that is Act 250 or a zoning permit, they might discover the experience was not as bad as they first thought, Brown explained.

“It’s the uncertainty that creates the bad rap.”

Keeping It In The Community

Brown said that staying local has meant that the decisionmakers have also stayed local. This gives customers better access when using the bank’s products.

“One of the things that benefits of community banks is that we know the area and everybody who works for the bank is here, including the decisionmakers,” Brown said.

A century ago, a group of 18 men founded The Bennington Co-Operative Savings & Loan. For several years, the co-operative shared space with co-founder William H Wills’ insurance agency.

If that name rings a bell, Wills served as Vermont’s governor from 1941 - 1945. The Wills Insurance Agency’s employees dealt with any bank business that arose. According to documents from the bank, the early days focused on home mortgages rather than savings accounts.

The co-operative’s board of directors awarded the first mortgage to Clarence D Wilson on October 5, 1917. Wilson borrowed $1,800 for a house on 219 Grove Street. The organization funded the loan by borrowing from The First National Bank of North Bennington at 5 percent interest and loaning it at 6 percent. A statement of assets and liabilities dated December 31, 1918, lists the co-operative’s assets at $11,094.23.

Brown believes the bank has remained true to its founding mindset.

According to a booklet commemorating the bank’s 100th anniversary, the co-operative made its first home loan outside Bennington in 1928.

The Great Depression slowed the local economy. Despite that, the co-operative remained solvent and shareholders continued to receive dividends of 4 to 6 percent. In January 1947, the bank issued its first GI Real Estate Loan.

Demand for home loans increased throughout the 1950s. The co-operative grew along with demand. In 1954 the co-operative’s assets surpassed $1 million. By 1979, the co-operative had outgrown its Main Street location and move its headquarters to their current location on North Street.

In 1999, The Bennington Co-operative Savings & Loan Association changed its name to The Bank of Bennington.

“We treat our employees as well as we can and we say we need to treat our customers just as well,” he said.

According to Brown, the vast majority of the bank’s loans are in Bennington County or surrounding counties. The bulk of the bank’s employees live locally.

The bank has also remained true to its independence. Brown reiterated that the bank’s shares are owned by a mutual company controlled by depositors. Unlike a publicly traded company, that bank’s shares are not public. The depositors elect the board of directors and they direct the bank. So a national bank has no way to buy a majority share.

“The depositors would have to agree to it,” Brown continued. “And that’s different from a public institution where the stock is out there, and anyone can buy up the stock, or offer a premium for the bank.”

He noted that Massachusetts has more mutual banks structured like the Bank of Bennington, but in general, fewer such banks exist anymore.

“The bank has performed well financially,” he said. “That’s important for many reasons but one is for the community. Because while The Bank of Bennington isn’t the only bank in the area, it is the only one headquartered in Bennington.”

“So for us to be strong and relevant is good for the community,” he said.

Senior Vice President Mary Callahan

Senior Vice President Mary Callahan has worked for The Bank of Bennington for 30 years.

Callahan started as a teller in 1987. In 1993, she took over the retail side of the bank.

When asked why she stayed at the bank for three decades, Callahan answered, “The people.”

“I was young when I started and the managers that I had helped me grow up,” she remembers. “They taught me everything I know about banking and a lot about life.”

Callahan continued saying that helping customers when they have issues is rewarding.

“I like to be a resource to customers and coworkers,” she said. “And it helps pay the bills.”

Callahan looked at Brown and grinned as she said this.

Brown returned the smile, “Mary was reluctant to be interviewed, but I told her I’d take her shoes away.”

Callahan laughs and continues. She never felt the need to go elsewhere. What she knows about banking she learned here. She has always felt supported personally and professionally.

Evolving expectations

Keeping up with technology is one of the bank’s operational focuses.

“The biggest thing we look at now is technology,” Brown said. “We need to stay relevant. The way we did things 10 years ago certainly doesn't fly today.”

“Customers expect a lot more convenience,” he continued. “That’s a challenge from an expense stand point and an expertise standpoint.”

Technology requires money, Brown said. “And we also need to continue to grow to cover all these expenses.”

Bank of Bennington converted its core operating system in October of 2014. The conversion’s sole focus: Allow the bank to establish and add new technology down the road.

The massive two-year process touched every aspect of the bank from employees’ workflow to customers. Brown remembers the process as stressful. He also remembers how employees rolled up their sleeves and provided whatever extra elbow grease the project needed.

The overhaul paid off and allowed the bank to implement services such as mobile banking and improve its online platform. Now, the bank seeks to add to its people pay services.

From an operational standpoint, that conversion stands out for Brown “because it allowed us to move from a constricted place to a place where we could grow and it also showed me what a great staff we have.”

Callahan oversaw much of the conversion and still oversees the bank’s technology needs.

“I’m not a traditional banker,” she said.

“When I started we sold shares of the bank at 5.5 percent. We had an eight-year CD at 8 percent.”

The bank also had savings accounts, checking accounts, and mortgage loans. Not until the late 1990s did the bank branch into commercial lending, Callahan noted. ATMs and debit cards had not entered the scene.

Brown said, “If we’re going to be a community bank, we have to take care of everybody not just one section of the economy so that’s where the commercial lending came in.”

From a technology standpoint, the bank had what Callahan calls “dumb terminals.”

“It was a DOS screen and you [tellers] typed commands to make a deposit,” she said. “Now everything is network driven and we have servers that have terabyte-size capacity versus the first server we installed … and the server was 250 megabytes.”

A smart phone could run rings around that first server.

“Things like that, I don’t know if the bank would have imagined 30 years ago,” she said.

Giving back

When the Great Recession hit in 2008, the bank increased its donations budget.

Bank leadership figured the recession had increased the community’s need and the bank was in the “fortunate position to help,” Brown said.

The bank has kept its donation budget at those Great Recession levels.

“We give away over $100,000 in contributions each year,” he said.

Employees routinely provide input on which nonprofit organization or community projects would benefit from the bank’s philanthropy.

“We try to think where the donations will do the most good,” Brown said.

For example, the Grow Bennington Initiative has received multiple gifts from the bank. The bank funded some of its projects such as stringing lights on the trees in downtown.

As part of the bank’s 100th anniversary in 2017, the bank provided a matching grant. Grow Bennington wanted to install a splash pad in a newly donated open space, Merchant’s Park. The project had a budget of between $150,000 and $200,000, said Brown.

The bank’s $25,000 matching grant helped the group leverage other funding, Brown said.

It makes him happy that the bank could help an organization obtain quick results for their projects.

In a January press release, the bank announced it had completed its annual year-end giving to local food banks and fuel assistance funds.

According to the press release, the bank donated $25,000 to more than 20 area organizations in 11 towns. The giving took place in November and December of 2018.

Brown said, “We believe that by helping low income households, we benefit the entire community, customers and non-customers alike”

Callahan added, “I think we play a very positive role in our community, not just in Bennington but in all our communities.”

“We try to identify what’s missing and help fill those holes,” she added.

Even though the Putnam Block project is a commercial venture, Callahan said it still fits into the ethos of filling in where the community has a gap.

“In order for us to stay viable as an institution, we need to have a viable community around us,” Callahan said. “If you don’t give back to your community, how could you expect your community to want to be a part of the bank?”

Hopefully customers recognize the bank’s commitment and choose The Bank of Bennington, she said.

“Ultimately, bottom line is, we’re looking to be the bank of choice,” Callahan added.

She noted that the bank has seen significant growth in the past 15 to 20 years.

“Non-bankers don’t always understand that we’re a highly regulated industry and that a lot of our decisions are controlled by those regulations,” she said. “Being managed locally makes a difference because we can sometimes do what bigger banks can’t do because of local decision making.”

The lessons of leadership

Brown feels grateful for his experience in the loan review department at The Bank of Bennington and at previous jobs.

He has witnessed what it looks like to have a loan portfolio “under duress.”

“So I was able to see more of what not to do in a three- or four-year period than probably many people get to see in a lifetime,” he said. “That was fortunate for me in my early career to see how things, that look good today, can go wrong in five or six years.”

The experience taught him to take the long view when considering a bank’s overall health rather than go for the quick buck.

“What I do now, I probably didn’t do 20 years ago, which is listen more and interject my opinion less,” he said. “And I think that’s good for full debate.”

As a CEO, Brown believes that if he interjects his opinion immediately, it shuts down conversations.

Why is debate important to him?

With a smile, Brown said, “I have the luxury of knowing that I’m never the smartest man in the room, so I need everybody else to help make good decisions and it’s as simple as that.”

The bank’s senior management team is a five-member team. Brown said all members have an equal voice in terms of discussion, debate, opinion, and there’s no repercussions for disagreeing with each other. He views these guidelines as part of a healthy decision-making process.

A leader can transfer that philosophy to anybody — staff or customer — and their concerns with the bank, he said. Those in authority must make sure they are “listening and not dismissing.”

“If one person comes to you, or two people come to you, about one issue, there’s probably 20 people who are thinking it and just not saying anything,” Brown cautioned.

It comes down to ensuring that people feel empowered, he said.

“You need to develop that bench strength,” he said. Then Brown sighed that he’d resorted to a sport’s analogy.

“I hope I step back more than I step forward on either taking credit or ultimately being seen making decisions,” he said.

He wants employees to feel that they can look up to, and feel that they can make that decision, or be mentored by multiple staff members.

“I don’t know if I’m more inclusive than others,” Brown said. “I just think you need to have people to want to work for the bank, and who want to do well for the bank, and want to have the bank’s best interest in mind all the time.”

A heavy-handed approach or someone with an ego do not inspire people to want to help, he said.

“I’m still learning that and I need to do more celebrating of people.”

Looking forward

If Brown has his way, he will finish his career at The Bank of Bennington.

“I absolutely love the bank and working in this community,” he said.

Imagining the bank’s next 100 years, Brown said, “I want to hope it’s more of the same.”

“I think we’ve done well as an institution,” he said. “I think we have a good reputation and I want to make sure we keep that.”

Technology will continue to keep him up at night.

“As soon as you stop swimming upriver you’re going backwards,” he said of the ever-evolving world of 0s, 1s, and customers’ expectations.

“I think we need to develop our staff as well,” Brown said. “We’re the only bank headquartered here so we can’t hire away from another bank.”

At the national level the idea exists that all banks are the same, Brown said. He added that the Dodd-Frank Wall Street Reform and Consumer Protection Act is a good example of this “one size fits all” mentality.

According to Brown, Dodd-Frank has hit community banks hard because it requires them to meet the same standards as massive national or multinational institutions.

“We didn’t do any of the things that got the economy in trouble,” he said, echoing his banking colleagues across the state.

Brown said The Bank of Bennington’s major competition is credit unions. Credit unions have built in tax advantages that save them money, he said.

At this, Brown stops himself. “I won’t say any more than that because I don’t want to sound like a complainer.”

He returns to the concept of long-term stability.

Brown remembers working at the bank as a mortgage lender in 2005 and 2006 unaware that the Great Recession was just around the corner.

According to Brown, several brokers he knew were approving risky “no documentation loans” and “no income verification loans.”

He lost business because he refused to approve what felt like tricky loans. It worried him. Was he making a mistake by not capturing that business?

Ultimately, the team he worked with decided that those loans did not fit the definition of prudent lending.

“In hindsight that was the right call,” he said. “That’s a difficult call when you’re losing business.”

“But the lending principals remain the same,” Brown continued. “We want to make sound loans because we own them.”

According to Brown, the bank retains the majority of its loans.

“We don’t sell them to the secondary market and say we don’t care what happens afterwards,” he said.

Problem loans take a lot of time and resources and it’s easier if a bank avoids creating its own challenges that eventually crop up in three to five years.

Brown said he is seeing some of the same dubious practice creep back into lending and the secondary market.

“So we’re very cautious about that,” he said.

For Brown, he hopes to ensure The Bank of Bennington remains a strong contributor to its community, its employees, its economy, and its customers.

“We’re here for the long haul regardless of whether people do business with us,” Brown said.